The market mood feels rather unsettled and despite a modest showing by dip buyers yesterday, it doesn’t really provide us with fresh direction in terms of risk sentiment and equities. The S&P 500 index shows that we are consolidating a bit as the push and pull continues:

Asian equities are feeding off the positive turnaround in Wall Street yesterday, while European futures are also pointing a little higher in trying to play catch up to the late turnaround in US stocks. However, US futures are indicating that risk remains sluggish with S&P 500 futures down 0.3%, Nasdaq futures down 0.4%, and Dow futures down 0.3%.

On the one hand, we’ve somewhat priced in maximum hawkishness already by central banks and one can argue that for some market pricing, traders have overstepped a little. *coughs in ECB*

That said, it doesn’t take away from the fact that we’re staring down stagflation risks and a pronounced economic slowdown globally. But as we look past rate hikes (eventually), the focus will switch towards when will central banks start talking about rate cuts – a tailwind for stocks – instead. That may not come until late 2023 but as economic data worsens by the day, we’re only drawing that timeline closer surely.

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